Oregon currently has the best-funded pension system in the country, and it is one of just six states on track to fund its modest retiree health benefits as well. On the pension side, Oregon’s strong performance is partially due to the state’s use of bonds to finance its liabilities following a significant drop in pension funding levels in 2002. The state also substantially reorganized its pension system in 2003, shifting to a hybrid plan that has both defined contribution and defined benefit elements. Oregon’s non-pension, retiree health benefits are extremely modest, but the state was on track to fully fund those obligations at the end of fiscal year 2006. (In fact, it was one of only 13 states with any assets set aside for non-pension benefits as of 2006.) If Oregon continues on this path, its total non-pension liability will be reduced from $832 million to $238 million, based on the higher interest rate the state can assume if it consistently sets funding aside in an irrevocable qualified trust.